Transparency International (TI) welcomes the Group of 20 decision to prioritise transparency as a means to curb systemic risks in the global financial and economic system and to provide a stimulus that also extends to the developing world.
“Agreeing to tackle opacity and to establish a new global governance body in the form of the Financial Stability Board announced today, is the kind of decisive action that we expected from this summit,” said Huguette Labelle, Chair of Transparency International. “In the long term, however, the G20’s initial steps towards transparency must be taken beyond the corridors of power and properly implemented, with input from civil society”, said Labelle.
As the direction set by the G20 summit is taken forward, it is essential for the largest macro-economic stimulus in history to include effective safeguards, with transparency, accountability and integrity at the forefront, in all aspects, particularly related to the public management of taxpayers’ funds.
The newly announced Financial Stability Board, tasked by the G20 to provide an early warning mechanism, should have accountability, integrity and transparency at its core. Civil society participation on the FSB would be one of many steps required for its success.
A reform of the “shadow banking system”, as UK Prime Minister Brown termed hedge funds along with credit rating agencies, would require a strong dose of transparency. TI has called for governance measures in this area to extend whistle-blowing procedures and protection to anonymous information on excessive risk-taking, as a key focus.
The nefarious role of tax havens as places where illicit gains can be stashed, has been rightly addressed by this summit. TI expects that the G20’s bold statement declaring the end of banking secrecy will go beyond a blacklist to include international cooperation and the actual recovery of assets looted from poor countries. The key priority now is for the G20 to follow up and implement their commitments. A vital first step is legislation and tax treaties in line with OECD standards.
Stabilising and reviving the global economy must be the short-term priority, but the bigger agenda – with broader opportunities – requires ensuring that the new regulatory order be rooted in transparency and accountability. The G20 has taken initial steps to use that window of opportunity and TI looks forward to civil society involvement.
Transparency International made specific recommendations to the G20 to restore public trust in the global economy and give back hope to the millions of people facing an unstable future. The recommendations –many of them reflected in the summit communiqué- covered a range of issues, from the use of public funds in ‘bail-out’ programmes to strengthening the role of development banks and regulatory authorities.
The three aims of this G20 Summit -stabilising financial markets, strengthening the global and economic systems and setting a path for sustainable growth- cannot be achieved without addressing a key root cause of the current meltdown, namely a severe lack of basic governance measures, transparency and accountability.
Transparency International is the global civil society organisation leading the fight against corruption
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